Advice for farmers when taking out crop insurance

Farming is a stressful occupation, especially when you consider all the variables of what could go wrong. Insurance Broker John Bowman of Ausure Insurance Young helps to demystify some important aspects of crop insurance:

Crop insurance may be purchased at any time during the growing season, subject to a 48 hour waiting period. This clause means that cover is not activated until 48 hours after acceptance of cover by the insurer. It is meant to reduce the chance of growers, faced with pending fire or hail, deciding to insure as the storm or fire is in sight.

How does Broadacre Crop Insurance work? Crop insurance policies for broad acre crops are yield-only covers. As such, the crop insurance policy does not include loss of quality, loss of nutritional value of seed or loss of germination ability of seed. Most policies also contain the provision to penalise the grain grower if deliberately under-insuring.

If the actual yield at the time of loss or damage is greater than the yield insured, the grower is considered as being his own insurer for the difference. Individual policies do vary as to the extent of cover and breadth of exclusions. It is important that grain growers are aware of its contents prior to taking cover.

What is the Replanting Allowance? Most companies now offer additional cover both before and after traditional cover started and finished. The replanting allowance has been introduced to provide cover for most crops following germination up to the first jointing or eight-leaf stages. The cover under the replanting allowance is limited to the costs associated with replanting if the damaged crop needs to be re-sown.

Another major policy extension is the coverage of harvested grain. With many growers now storing grain on their farms, most insurers have extended coverage for grain in storage to loss or damage resulting from fire, lightning or explosion. Chemical overspray or straying livestock are other benefits where claims are payable under this benefit on the identification and disclosure or a responsible third party.

There is now available by many insurers, a post harvest policy where the grower pays a premium on the actual yield harvested from the paddocks insured. This option may be beneficial in years such as this, with the imminent threat of locusts severely affecting the crop yield after the final revision date. Forms are completed by the grower after harvest, thereby paying a premium on the paddocks actual yield. This may be audited randomly by the insurer requesting access to crop records, yield monitor output or grain delivery receipts.

If you are considering carrying the risk of crop loss or damage yourself, you should review your debt situation first. Generally, to be safe, you will need to be free of debt as a major fire frost or hail could soon result in substantial and irreversible financial loss. This is almost impossible in hard economic times and drought, when most farmers must borrow heavily to sow crops. If you find yourself in this situation, you can ill-afford to carry the losses from the cost of sowing the crop, the potential loss of yield and the potential loss of profit from the crop.

The Insure 247 Team is here to Help with your business insurance needs, our team of specialist are experts in small to medium enterprise (SME) insurance. As well as your business needs the team can also look after you and your family’s needs. In 2017 Insure 247 was one of Australia’s fastest business insurance brokerages

   

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